Total factor productivity and the spillover hypothesis: some new evidence

In this paper I test the spillover hypothesis of the endogenous growth literature on a sample of manufacturing firms in Italy, 1989–1994, using a new approach based on the Malmquist index. First, I measure the productivity growth registered by the high- and non-high-tech firms computing the Malmquist index with DEA. I decompose it into technical change and technical efficiency change. Then I test whether the technical change registered by high-tech firms affects productivity growth of non-high-tech firms, after controlling for factors which can potentially affect productivity growth.

Spillover effects of service failures in coalition loyalty programs:the buffering effect of special treatment benefits

Coalition loyalty programs are on the rise, yet few studies investigate the impact of service failures in such programs. Using data from a retail context, the authors show that a program partner deemed responsible for a service failure suffers negative customer responses. However, customers' perceptions of the benefits of the coalition loyalty program buffer these consequences. Perhaps most importantly, when customers perceive the program's special treatment benefits as low, direct and indirect spillover effects occur, such that a service failure by one program partner has a negative effect on customer loyalty toward the program itself. © 2013 New York University.

Modernisation in small steps? Comparing the organisational reforms of the British Conservative Party and the German CDU

Research on political parties has long identified “environmental” pressures upon parties to undertake organisational and programmatic reforms – this applies in particular to “catch-all” parties or Volksparteien. Changed social and media structures, the decline of organisations traditionally associated with the parties, and the growth in alternative possibilities of political participation create significant organisational – as well as programmatic – challenges. This paper compares the German CDU and the British Conservatives in two respects: in particular it focuses on their organisational responses to the election defeats they suffered at the end of the 1990s, examining those reforms which took place and consider whether these match the expectations of organisational reforms anticipated by proponents of the “cartel party thesis”. While in both cases there are similarities, but (in particular in the German case) it is important not to understate the extent of internal party resistance to reform, and thus the difficulties with which aspiring party reformers are confronted. This conclusion suggests, more broadly, that in reality the process of party change is more than an almost automatic, isomorphic, and inevitable response to a changing environment. Rather it is punctuated, messy, and often contingent on events and agents.

Putting people first? Chinese state-owned enterprises' adjustment to globalisation

This paper analyses the impact of FDI on the employment, productivity, profitability and survival performance of urban SOEs in China, with the aid of a rich panel data set over the period 1999–2005. Our estimation strategy controls for the endogeneity of a number of regressors and accounts for firm-level unobserved heterogeneity. Four key results emerge from the analysis: (i) Firmlevel foreign finance enhances the employment and productivity growth of SOEs, as well as their survival prospects; (ii) Competition from sectoral FDI has a deleterious impact on the growth and survival probability of SOEs without access to any foreign capital; (iii) Export-oriented FDI in downstream sectors has negative performance ramifications; and (iv) There are no discernible spillover effects that can be attributed to FDI in upstream sectors, suggesting limited linkages between multinational firms and SOEs.

Technology sourcing versus technology exploitation:An analysis of US foreign direct investment flows

The traditional paradigm of foreign direct investment (FDI) suggests that FDI is undertaken principally to exploit some firm-specific advantage in a foreign country which provides a locational advantage to the investor. However, recent theoretical work suggests a model of FDI in which the motivation is not to exploit existing technological advantages in a foreign country, but to access such technology and transfer it from the host economy to the investing multinational corporation via spillover effects. This paper tests the technology sourcing versus technology exploiting hypotheses for a panel of sectoral FDI flows between the United States and major OECD nations over a 15 year period. The research makes use of Patel and Vega's (Research Policy, 28, 145-55, 1999) taxonomy of sectors which are likely a priori to exhibit technology sourcing and exploiting behaviour respectively. While there is evidence that FDI flows into the United States are attracted to R and D intensive sectors, very little support is found for the technology sourcing hypothesis either for inward or outward FDI flows. The results suggest that, in aggregate, firm-specific 'ownership' effects remain powerful determinants of FDI flows.

Linking FDI motivation and host economy productivity effects:conceptual and empirical analysis

We develop a taxonomy that relates foreign direct investment (FDI) motivation (technology- and cost-based) to its anticipated effects on host countries domestic productivity. We then empirically examine the effects of FDI into the United Kingdom on domestic productivity, and find that different types of FDI have markedly different productivity spillover effects, which are consistent with the conceptual analysis. The UK gains substantially only from inward FDI motivated by a strong technology-based ownership advantage. As theory predicts, inward FDI motivated by technology-sourcing considerations leads to no productivity spillovers.

Foreign direct investment, technology sourcing and reverse spillovers

Recent theoretical work points to the possibility of foreign direct investment motivated not by 'ownership' advantages which may be exploited by a multinational enterprise but by the desire to access the superior technology of a host nation through direct investment. To be successful, technology sourcing foreign direct investment hinges crucially on the existence of domestic-to-foreign technological externalities within the host country. We test empirically for the existence of such 'reverse spillover' effects for a panel of UK manufacturing industries. The results demonstrate that technology generated by the domestic sector spills over to foreign multinational enterprises, but that this effect is restricted to relatively research and development intensive sectors. There is also evidence that these spillover effects are affected by the spatial concentration of industry, and that learning-by-doing effects are restricted to sectors in which technology sourcing is unlikely to be a motivating influence.

The impact of foreign direct investment on labour productivity in the Chinese electronics industry

Foreign direct investment (FDI) may have a positive impact on labour productivity in recipient industries through direct introduction of capital, technology and management skills and indirectly through spillover effects on domestic firms. This study uses a model intended to examine the overall effects of inward FDI in the Chinese electronics industry. Official data are used for 41 sub-sectors of the industry in 1996 and 1997 having differing levels of FDI. Labour productivity is modelled as dependent on the degree of foreign presence in the industry and other variables, namely capital intensity, human capital and firm size for scale factors. The econometric results suggest that foreign presence in the industry is associated with higher labour productivity. © 2001 Elsevier Science Ltd.

Technology flows, outsourcing and productivity:an analysis of UK trade and FDI

By engaging in trade and foreign direct investment (FDI) with foreign partners, a country can access the R&D and related knowledge stocks of other countries (by accident or by design) and so benefit from those stocks of knowledge at a cost lower than that which would be incurred by developing the knowledge internally. This should lead to beneficial ‘spillover’ effects on the productivity of domestic firms. However, the literature on technology spillovers from trade and FDI is ambiguous in its findings. This may in part be because of the assumption in much of the work that trade and FDI flows are homogeneous in their determinants and thus in their effects. We develop a taxonomy of trade and FDI determinants based on R&D intensity and unit labour cost differentials, and test for the presence of spillovers from inward investment and imports on an extensive sample of UK manufacturing plants. We find that both trade and FDI have measurable spillover effects, but the size of these effects varies depending on the technological and labour cost differentials between the UK and its trading partners. There is therefore an identifiable link between the determinants and effects of trade and FDI which the previous literature has not explored. We also find that absorptive capacity matters for spillovers from FDI, but not from trade. Overall, these findings suggest that the productivity effects of FDI are largely restricted to plants with high absorptive capacity, while the productivity effects of imports occur largely among higher-technology plants regardless of their absorptive capacity.

Exchange controls and the transmission of equity market volatility:the case of the UK

The paper investigates the impact that the relaxation of UK exchange controls in October 1979, had on the transmission of equity market volatility from the UK to other major equity markets. It is suggested that the existence of exchange controls in the UK was an important source of market segmentation which disturbed the transmission of shocks from one country to another, even when shocks contained global information. It is found that when a spillover GARCH(1,1) model is estimated for the five years before and after the removal of exchange controls, volatility shocks spill over from the UK to other markets much more strongly after the removal of exchange controls. This appears to suggest that volatility as well as returns have become more closely related since the UK removed exchange controls.

Strategy making process, its content and context in small professional football clubs

This thesis examines the phenomenon of strategy. Making as practised by small professional football clubs. The study was undertaken because football clubs were perceived to have problems with strategy-making and because it was believed that the specific circumstances of football clubs could be outside the range of views covered by conventional views of strategy-making. The characteristics of the club environment are its uncertainty and unpredictability, simultaneous competition and co--operation, strong regulations, and a not-for-profit orientation. Small clubs in particular face a constant struggle for financial viability and survival, due in part to split business and playing objectives. The study was designed to establish the extent and nature of the difficulties clubs experience with a view to preparing the way for creating practical guidance on ways to overcome them. Clearly, in order to survive in the long term, small professional football clubs require very effective strategic decisions. This study has addressed this issue by inquiring into the nature of strategy making for these organisations with the objective to establish the general direction in which the football clubs in question should be moving. As a result, the main research question to guide this investigation was determined as: Why do small professional football clubs have difficulties making strategies. The investigation was based on an analysis the concept of strategy and its elements, the strategic vision and objectives, the process by which strategic action comes about, the strategic action itself, and the context within which this action occurs. Data has been collected, analysed and interpreted in relation to each of these elements. Together with a wide variety of published material, 20 small football clubs have been sampled and personal interviews were conducted with board members of those clubs. The findings indicate that small football clubs do indeed experience considerable difficulties in making strategies, the reasons for which lie both in the characteristics of their competitive environment and their approaches to strategy-making. The competitive environment is characterised by a cartel-like structure with a high degree of regulation, high levels of uncertainty, little control over the core product or the production process, short-term business cycles and a close geographical link between a club with its local market. The management of clubs is characterised by the need to balance conflicting sporting and business objectives. Formal planning techniques are of little use in the small football club context as decision-making processes have a strong political character and the development of novel strategies is hindered by a strong conservative, industry paradigm and a lack of financial and managerial resources. It is concluded that there is no simple advice to be given to clubs, as they must re-examine the relationship between their playing and business objectives to create a unified and workable approach.

Determinants and impacts of inward FDI in Japan

The research consists of three empirical studies. The first examines how source country characteristics affect the aggregate FDI inflows in the Japanese economy during the period of 1989-2002. Our results demonstrate that the stable investment climate of the home country is an essential factor indicating FDI inflows to Japan. By contrast, the export performance of the source country is negatively correlated with FDI inflows, indicating that international trade and FDI are substitutes. The second study identifies the determinants of foreign penetration across Japanese manufacturing sectors at the three-digit level during the period of 1997-2003. More importantly, this study examines the moderating effects of keiretsu affiliations on the relationship between various sectoral characteristics and foreign participation. The evidence of both horizontal and vertical keiretsu impacts on foreign penetration depends on not only different proxy measures used for inward FDI, but also on the level of technological sophistication in given sectors. In general, our results demonstrate that horizontally linked keiretsu are positively associated with foreign productions in knowledge-intensive sectors. By contrast, this effect becomes a significant entry barrier to foreign employment in low-tech sectors. The final study evaluates the impacts of a foreign presence on the productivity of Japanese manufacturing firms over the period of 1997-2003. Our results suggest that spillover effects largely differ according to the level of absorptive capacity of indigenous firms.

Technology flows, outsourcing and productivity:an analysis of UK trade and FDI

The literature on technology spillovers from trade and FDI is ambiguous in its findings. This may in part be because of the assumption in much of the work that trade and FDI flows are homogeneous in their determinants and thus in their effects. We develop a taxonomy of trade and FDI determinants based on R&D intensity and unit labour cost differentials, and test for the presence of spillovers from inward investment and imports on an extensive sample of UK manufacturing plants. We find that both trade and FDI have measurable spillover effects, but the sign and extent of these effects varies depending on the technological and factor cost differentials between the recipient and host economies. There is therefore an identifiable link between the determinants and effects of trade and FDI which the previous literature has not explored.

FDI horizontal and vertical effects on local firm technical efficiency

Differencing from previous studies on foreign direct investment (FDI) spillovers to domestic enterprises which mainly focus on productivity, in this paper we take a different perspective by analysing the impacts of FDI to technical efficiency of domestic firms. The paper goes beyond the current literature to shed some light on the spillover effects of FDI to technical efficiency of small and medium enterprises in a developing country. By exploiting a firm-level panel dataset and using SFA models following Battese and Coelli (1995), the paper is able to analyse horizontal spillovers through imitation and competition and labour mobility as well as vertical spillovers through backward and forward linkages on technical efficiency. The paper contributes to the understanding of potential effects on foreign invested enterprises on domestic economy in general and local enterprises performance in particular. Thus it importantly assists policy making by the government of developing countries, where FDI is believed to create technical spillovers on domestic enterprises.